Ford swings to surprise profit
Ford Motor Co. on Thursday swung to a surprise second-quarter profit after seven quarters of losses on cost-cutting and a turnaround in its core automotive operations, pushing its shares higher.
Ford, which is in the midst of a restructuring plan that includes closing 16 plants and cutting up to 45,000 jobs, posted a net profit of $750 million, or 31 cents per share, compared with a loss of $317 million, or 17 cents, a year earlier.
Profit from continuing operations, excluding one-time items, was 13 cents per share. That blew past the average Wall Street forecast of a loss of 37 cents per share as tracked by Reuters Estimates.
The positive result for the quarter marked the first profit for Ford since the second quarter of 2005 and its first auto-related profit since the first quarter of 2005.
Ford shares rose 3.5 percent to $8.25 in pre-market trading from a Wednesday close of $7.97 on the New York Stock Exchange.
Ford said it was currently exploring in "greater detail" the sale of its Jaguar and Land Rover luxury units. The No. 2 U.S. automaker also said it was conducting a strategic review of its Swedish luxury nameplate Volvo that is expected to conclude by the end of the year.
In an update on its turnaround, Ford also said it was on track to have a lower cash outflow due to its restructuring than the $17 billion it had previously forecast between 2007 and 2009.
The surprise profit could complicate Ford's contract talks with the United Auto Workers union that began this week. The automaker is seeking sweeping concessions that would bring its labor costs in line with Japanese automakers operating in the United States.
UAW President Ron Gettelfinger has said that Ford was in better financial shape than some analysts believed, citing the automaker's cash holdings.
Ford ended the second quarter with $37.4 billion in cash in its auto operations, including some short-term assets held in a trust for employee benefits.
AUTO BUSINESS IMPROVES
Dearborn, Michigan-based Ford, which has seen some recent sales success for its new crossover models like the Ford Edge and won quality accolades during the quarter, said second-quarter revenue rose to $44.2 billion from $41.9 billion a year earlier.
Ford's core automotive operations swung to a profit of $378 million before taxes and excluding special charges, while its finance arm contributed a net profit of $62 million. In North America, Ford's loss narrowed to $279 million during the quarter before taxes and excluding special items.
The improvements in Ford's auto operations were driven by better pricing and cost reductions, Ford said.
Ford said special items contributed $443 million to its second-quarter pre-tax results, including $206 million from the sale of its Aston Martin unit.
The automaker also said it had cut costs by $600 million in the second quarter and $1.1 billion through the first half on reduced warranty costs, lower costs for retiree health care and a smaller payroll.
Ford's U.S. sales in the second quarter fell 9 percent as the automaker moved away from low-margin sales to car rental operators.
The company said it remained on track to be consistently profitable in its auto operation by 2009.
(Published by Reuters, July 26, 2007)